This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

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new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

55995 

Vol. 71, No. 186 

Tuesday, September 26, 2006 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Part 457 

RIN 0563–AB97 

Common Crop Insurance Regulations; 

Peanut Crop Insurance Provisions 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Final rule. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) finalizes 

amendments to the Peanut Crop 

Insurance Provisions. The intended 

effect of this action is to provide policy 

changes and clarify existing policy 

provisions to better meet the needs of 

the insured producers. The changes will 

apply for the 2007 and succeeding crop 

years. 

DATES: Effective Date: October 26, 2006. 

FOR FURTHER INFORMATION CONTACT: Gary 

Johnson, Risk Management Specialist, 

Product Management, Product 

Administration and Standards Division, 

Risk Management Agency, United States 

Department of Agriculture, 6501 Beacon 

Drive, Stop 0812, Room 421, Kansas 

City, MO 64133–4676, telephone (816) 

926–7730. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This rule has been determined to be 

non-significant for the purposes of 

Executive Order 12866 and, therefore, it 

has not been reviewed by the Office of 

Management and Budget (OMB). 

Paperwork Reduction Act of 1995 

Pursuant to the Paperwork Reduction 

Act of 1995 (44 U.S.C. chapter 35), the 

collections of information in this rule 

have been approved by OMB under 

control number 0563–0053 through 

November 30, 2007. 

E-Government Act Compliance 

FCIC is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) establishes 

requirements for Federal agencies to 

assess the effects of their regulatory 

actions on State, local, and tribal 

governments and the private sector. 

This rule contains no Federal mandates 

(under the regulatory provisions of title 

II of the UMRA) for State, local, and 

tribal governments or the private sector. 

Therefore, this rule is not subject to the 

requirements of sections 202 and 205 of 

UMRA. 

Executive Order 13132 

It has been determined under section 

1(a) of Executive Order 13132, 

Federalism, that this rule does not have 

sufficient implications to warrant 

consultation with the States. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States, or on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

Regulatory Flexibility Act 

FCIC certifies that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. Program requirements for the 

Federal crop insurance program are the 

same for all producers regardless of the 

size of their farming operation. For 

instance, all producers are required to 

submit an application and acreage 

report to establish their insurance 

guarantees and compute premium 

amounts, or a notice of loss and 

production information to determine an 

indemnity payment in the event of an 

insured cause of crop loss. Whether a 

producer has 10 acres or 1000 acres, 

there is no difference in the kind of 

information collected. To ensure crop 

insurance is available to small entities, 

the Federal Crop Insurance Act 

authorizes FCIC to waive collection of 

administrative fees from limited 

resource farmers. FCIC believes this 

waiver helps to ensure small entities are 

given the same opportunities to manage 

their risks through the use of crop 

insurance. A Regulatory Flexibility 

Analysis has not been prepared since 

this regulation does not have an impact 

on small entities, and, therefore, this 

regulation is exempt from the provisions 

of the Regulatory Flexibility Act (5 

U.S.C. 605). 

Federal Assistance Program 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

No. 10.450. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 12372, 

which require intergovernmental 

consultation with State and local 

officials. See the Notice related to 7 CFR 

part 3015, subpart V, published at 48 FR 

29115, June 24, 1983. 

Executive Order 12988 

This rule has been reviewed in 

accordance with Executive Order 12988 

on civil justice reform. The provisions 

of this rule will not have a retroactive 

effect. The provisions of this rule will 

preempt State and local laws to the 

extent such State and local laws are 

inconsistent herewith. With respect to 

any direct action taken by FCIC under 

the terms of the crop insurance policy, 

the administrative appeal provisions 

published at 7 CFR part 11 must be 

exhausted before any action for judicial 

review of any determination or action 

by FCIC may be brought. 

Environmental Evaluation 

This action is not expected to have a 

significant impact on the quality of the 

human environment, health, and safety. 

Therefore, neither an Environmental 

Assessment nor an Environmental 

Impact Statement is needed. 

Background 

On January 25, 2006, FCIC published 

a notice of proposed rulemaking in the 

Federal Register at 71 FR 4056–4061 to 

revise 7 CFR 457.134 Peanut Crop 

Insurance Provisions. Following 

publication of the proposed rule, the 

public was afforded 60 days to submit 

written comments and opinions. A total 

of 12 sets of comments were received 

from reinsured companies, agents, trade 

associations, producers, an insurance 


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service organization and other 

interested parties. The comments 

received and FCIC’s responses are as 

follows: 

Comment: An insurance service 

organization commented on the 

definition of ‘‘base contract price’’ by 

asking if the maximum amount of a base 

contract price will always be specified 

in the Special Provisions. The 

commenter asked if it will be a 

consistent value for all states and 

counties. The commenter also asked if 

this maximum amount is intended to be 

set high enough to reflect contracted 

values for organic peanuts (i.e., values 

as high as $0.45 per pound or $900.00 

per ton). 

Response: The maximum amount of 

the base contract price will not be in the 

Special Provisions, but rather a price 

factor will be specified in the Special 

Provisions, which will be used by 

multiplying such factor by the price 

election issued by FCIC, as applicable 

and by peanut type. FCIC anticipates 

providing a price factor that is 

consistent for all states and counties. 

The base contract price may or may not 

reflect the value of organic peanuts 

grown under contract. 

Comment: An insurance service 

organization suggested a definition of 

‘‘damaged production’’ or ‘‘damaged 

peanuts’’ should be added otherwise 

many non-insurable defects could be 

allowed and non-insurable discounts 

could be subtracted from the value of 

the peanuts by a buyer to result in a 

value less than 85 percent of the 

applicable price election when 

determining quality loss adjustment. 

Response: The definition of 

‘‘damaged’’ in the Basic Provisions 

requires that the peanuts be injured or 

deteriorated before they are considered 

damaged. Further, section 14(e) of the 

Peanut Crop Provisions requires the 

damage to be due to an insurable cause 

of loss before quality adjustment will 

apply. As always, it is the producer’s 

burden to establish the insured cause of 

loss that caused the damage. If such 

burden cannot be met or such cause of 

loss would not likely cause the type of 

damage found, quality adjustment 

would not be applicable. In addition, 

the peanuts must be graded, which will 

establish whether they have been 

injured or deteriorated. These 

provisions should be sufficient to 

ensure that only peanuts injured or 

deteriorated by insured causes of loss 

are subject to quality adjustment and 

preclude the possibility that noninsurable defects or non-insurable 

discounts are covered. Therefore, no 

change has been made. 

Comment: Three trade associations 

and an approved insurance provider 

commented that requiring the peanut 

producers to include all of their peanut 

acres in an enterprise unit would 

impose undue hardship. The 

commenters state that the number of 

peanut producers is decreasing; 

however, their acreage is increasing 

because of not being limited by the 

quota program. The commenters also 

claim that peanut producers deal with 

multiple farm serial numbers and under 

the current peanut loan program, 

virtually every load of peanuts is placed 

under loan through the Farm Service 

Agency (FSA) peanut loan program. 

Each farm has potentially differing land 

or soils characteristics, disease patterns, 

and rainfall frequency. The commenters 

state that a peanut loan is not made to 

the producer if the yield varies 

substantially from the average peanut 

yield history for the county. 

Response: FCIC agrees with the 

commenters and has removed the 

provision that limits peanuts grown 

under contract to an enterprise unit. 

Basic and optional units for peanuts 

will be allowed on peanuts consistent 

with other Category B crops, unless 

limited by the Special Provisions. 

Comment: An insurance service 

organization commented the definition 

of ‘‘harvest’’ would be better defined as 

‘‘the completion of digging and 

threshing’’ rather than ‘‘removal from 

the field.’’ The commenter asked if 

removal from the field has been a 

problem for peanuts as it has for cotton. 

Response: FCIC agrees that digging 

and threshing are part of the harvest 

process and should be included in the 

definition. However, referring to 

removal from the field in the definition 

will also allow harvest to remain an 

event that ends the insurance period. 

Previously, section 10(c) stated that 

‘‘removal of peanuts from the field’’

replaced harvest as the event marking 

the end of the insurance period for the 

purposes of section 11 of the Basic 

Provisions, but this definition of harvest 

will make section 10(c) no longer 

necessary and it will be removed. 

Comment: An insurance service 

organization asked why the definition of 

‘‘inspection certificate and sales 

memorandum’’ was deleted. The 

commenter states that the memorandum 

is referring to the Farm Service Agency 

(FSA)–1007 and asks whether this form 

is still being utilized by FSA and 

buyers. 

Response: The inspection certificate 

and sales memorandum were mainly 

used to obtain the ‘‘value per pound,’’

which was a term used in the loss 

adjustment process. However, value per 

pound is no longer used in the policy 

now that price elections have been 

established through the contract or by 

FCIC. Therefore, the inspection 

certificate and sales memorandum are 

no longer necessary to determine the 

terms of the policy but the documents 

can be used as supporting 

documentation for production reporting 

and loss adjustment purposes. 

Comment: An insurance service 

organization commented on the 

definition of ‘‘price election’’ and stated 

that it should be clearer that the base 

contract price in the sheller contract 

may be limited if it exceeds the 

maximum amount in the Special 

Provisions. This also could be clearer 

about the distinctions between peanuts 

not grown under a sheller contract and 

those grown under a sheller contract. 

Response: The definition of ‘‘base 

contract price’’ specifies that it is 

limited to an amount not greater than 

the price election times the price factor 

contained in the Special Provisions. 

Therefore, it is not necessary to reiterate 

this limitation in the definition of ‘‘price 

election.’’ Further, sections 3(a) and (b) 

of the Peanut Crop Provisions specify 

what price will be used when peanuts 

are grown under a sheller contract and 

not grown under a sheller contract. 

However, FCIC agrees the provisions 

could be clearer and has revised them 

accordingly. 

Comment: An insurance service 

organization commented on the 

definition of ‘‘segregation I, II, or III’’

and indicated the definition may still be 

used in the minimum quality and 

handling standards for domestic and 

imported peanuts in the United States 

and Farm Service Agency (FSA) Notice 

PS–521. 

Response: The definition of 

‘‘segregation I, II, or III’’ peanuts was 

necessary because the price election was 

originally based on average Commodity 

Credit Corporation support price for 

these type of quota and non-quota 

peanuts. However, with the elimination 

of quotas, FCIC is now establishing the 

price elections or the base contract price 

is used. Therefore, the term ‘‘segregation 

I, II, or III’’ is no longer necessary to 

establish a term of the policy. However, 

the Notice PS–521 may be used as 

supporting documentation for 

production reporting and loss 

adjustment purposes. 

Comment: An insurance service 

organization asked with respect to 

section 12(a)(1) whether the insured 

(tenant and/or landlord) has to incur 

replant expense to collect a replant 

payment under this policy. 

Response: Under these Crop 

Provisions, replant payments are made 


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based on share. Therefore, if the tenant 

and/or landlord have an insured share 

of the insured crop, they are entitled to 

receive a replant payment for their 

applicable share, regardless of whether 

they have incurred any expenses. Since 

all other obligations and payments 

under the policy are based on share, it 

seemed more equitable and less 

burdensome to make replant payments 

also on a share basis. 

Comment: An insurance service 

organization commented regarding 

section 12(b)(1) and asked what price 

election is used for a replant payment 

when the insured has multiple sheller 

contracts each with differing base 

contract prices and/or the insured also 

has peanuts insurable but not grown 

under a contract and the price election 

is the FCIC announced price. 

Response: If the producer did not 

elect the price election specified in the 

Special Provisions and there are 

different base contract prices and/or the 

insured also has insurable peanuts not 

grown under a contract, replanting 

payments will be valued using the price 

election elected by the insured for 

planted acreage in each unit, as 

applicable. For an example, if the 

insured has two sheller contracts and 

the first base contract price is $0.23 per 

pound for Runner type peanuts, then 

$0.23 per pound will be used for the 

value of any replanted Runner type 

peanut acreage. If the second base 

contract is priced $0.21 per pound for 

Spanish type peanuts, then $0.21 per 

pound will be used for the value of any 

replanted Spanish type peanut acreage. 

If there are two separate sheller 

contracts for the same type peanuts, for 

example two contracts for Runner type 

peanuts at $0.23 and $0.21, respectively, 

if the contracts apply to separate 

optional units, each respective price 

election will apply to each respective 

unit. If the peanuts under both contracts 

are insured in the same unit, then the 

replanted acreage will be prorated to 

each contract based on the number of 

acres needed to fulfill each contract (For 

example, if there are 20 acres in the unit 

and 10 were replanted, the production 

guarantee per acre for the unit is 2,000 

pounds per acre, and the contract for 

$0.23 was for 25,000 pounds and the 

contract for $0.21 was for 15,000 

pounds, then the acreage under the 

$0.23 contract constitutes 62.5 percent 

of the acreage in the unit (25,000/ 

40,000) and the other contract 37.5 

percent of the acreage (15,000/40,000). 

Of the 10 acres replanted, 6.25 (10 × 

.625) would be paid at the $0.23 price 

election and 3.75 (10 × .375) acres 

would be paid at the $0.21 price 

election). If the insured has peanuts not 

grown under a contract or the producer 

selects the price election specified in 

the Special Provisions, the replanting 

payments will be valued using the price 

election as specified in the Special 

Provisions. The provisions will be so 

clarified. 

Comment: An insurance service 

organization commented regarding 

section 15 and asked what price election 

will be used for prevented planting 

acres when the insured has multiple 

sheller contracts each with the contracts 

based on production and/or other 

peanuts are insurable without a sheller 

contract. 

Response: If the producer did not 

elect the price election specified in the 

Special Provisions and there are 

different base contract prices and/or the 

insured also has insurable peanuts not 

grown under a contract, the prevented 

planting payment will be based on the 

price election elected by the insured. 

For an example, if the insured has two 

sheller contracts and if the first base 

contract price is $0.23 per pound for 

Runner type peanuts, then $0.23 per 

pound will be used for the value of any 

prevented planted Runner type peanut 

acreage. If the second base contract 

price is $0.21 per pound for Spanish 

type peanut, then $0.21 per pound will 

be used for the value of any prevented 

planted Spanish type peanut acreage. If 

there are two separate sheller contracts 

for the same type peanuts, for example 

two contracts for Runner type peanuts at 

$0.23 and $0.21, respectively, if the 

contracts apply to separate optional 

units, each respective price election will 

apply to each respective unit. If the 

peanuts under both contracts are 

insured in the same unit, then the 

prevented planting acreage will be 

prorated to each contract based on the 

number of acres needed to fulfill each 

contract (For example, if there are 20 

acres in the unit and 10 were prevented 

from planting, the production guarantee 

per acre for the unit is 2,000 pounds per 

acre, and the contract for $0.23 was for 

25,000 pounds and the contract for 

$0.21 was for 15,000 pounds, then the 

acreage under the $0.23 contract 

constitutes 62.5 percent of the acreage 

in the unit (25,000/40,000) and the other 

contract 37.5 percent of the acreage 

(15,000/40,000). Of the 10 acres 

prevented from planting, 6.25 (10 × 

.625) would be paid at the $0.23 price 

election and 3.75 (10 × .375) acres 

would be paid at the $0.21 price 

election). If the insured has peanuts not 

grown under a contract or the producer 

selects the price election specified in 

the Special Provisions, the prevented 

planting payments will be valued using 

the price election as specified in the 

Special Provisions. The provisions will 

be so clarified. 

Comment: An insurance service 

organization asked if the peanut 

program would be rated accordingly for 

the addition of the prevented planting 

insurance coverage. 

Response: FCIC will adjust premium 

rates to reflect the addition of prevented 

planting coverage. 

In addition to the changes described 

above, FCIC has made minor editorial 

changes and the following changes: 

1. Removed the paragraph 

immediately preceding section 1 which 

refers to the order of priority in the 

event of conflict. This same information 

is contained in the Basic Provisions. 

Therefore, it is duplicative and has been 

removed in the Crop Provisions. 

2. Revised the definition of 

‘‘marketing association’’ to clarify it is a 

cooperative approved by the Secretary 

of Agriculture to administer payment 

programs for peanuts. 

3. Revised section 14(b)(1) to remove 

redundant language for clarification. 

List of Subjects in 7 CFR Part 457 

Crop insurance, Peanut, Reporting 

and recordkeeping requirements. 

Final Rule 

■ Accordingly, as set forth in the 

preamble, the Federal Crop Insurance 

Corporation amends 7 CFR part 457, 

Common Crop Insurance Regulations, 

for the 2007 and succeeding crop years 

as follows: 

PART 457—COMMON CROP 

INSURANCE REGULATIONS 

■ 1. The authority citation for 7 CFR 

part 457 continues to read as follows: 

Authority: 7 U.S.C. 1506(l) and 1506(p). 

■ 2. Revise § 457.134 to read as follows: 

§ 457.134 Peanut Crop Insurance 

Provisions. 

The Peanut Crop Insurance Provisions for 

the 2007 and succeeding crop years are as 

follows: 

FCIC policies: United States Department of 

Agriculture, Federal Crop Insurance 

Corporation. 

Reinsured policies: (Appropriate title for 

insurance provider). 

Both FCIC and reinsured policies. 

Peanut Crop Insurance Provisions. 

1. Definitions 

Base contract price. The price for farmers’

stock peanuts stipulated in the sheller 

contract, without regard to discounts or 

incentives that may apply, not to exceed the 

price election times the price factor specified 

in the Special Provisions. 

Farmers’ stock peanuts. Picked or threshed 

peanuts produced in the United States, 

which are not shelled, crushed, cleaned, or 


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otherwise changed (except for removal of 

foreign material, loose shelled kernels and 

excess moisture) from the condition in which 

peanuts are customarily marketed by 

producers. 

Green peanuts. Peanuts that are harvested 

and marketed prior to maturity without 

drying or removal of moisture either by 

natural or artificial means. 

Handler. A person who is a sheller, a 

buying point, a marketing association, or has 

a contract with a sheller or a marketing 

association to accept all of the peanuts 

marketed through the marketing association 

for the crop year. The handler acquires 

peanuts for resale, domestic consumption, 

processing, exportation, or crushing through 

a business involved in buying and selling 

peanuts or peanut products. 

Harvest. The completion of digging and 

threshing and removal of peanuts from the 

field. 

Marketing association. A cooperative 

approved by the Secretary of the United 

States Department of Agriculture to 

administer payment programs for peanuts. 

Planted acreage. In addition to the 

requirement in the definition in the Basic 

Provisions, peanuts must initially be planted 

in a row pattern which permits mechanical 

cultivation, or that allows the peanuts to be 

cared for in a manner recognized by 

agricultural experts as a good farming 

practice. Acreage planted in any other 

manner will not be insurable unless 

otherwise provided by the Special Provisions 

or by written agreement. 

Price election. In addition to the definition 

in the Basic Provisions, the price election for 

peanuts insured in accordance with a sheller 

contract will be the base contract price 

specified in the sheller contract. 

Price factor. The factor specified in the 

Special Provisions that places limits on the 

base contract price. 

Sheller. Any business enterprise regularly 

engaged in processing peanuts for human 

consumption; that possesses all licenses and 

permits for processing peanuts required by 

the state in which it operates; and that 

possesses facilities, or has contractual access 

to such facilities, with enough equipment to 

accept and process contracted peanuts within 

a reasonable amount of time after harvest. 

Sheller contract. A written agreement 

between the producer and a sheller, or the 

producer and a handler, containing at a 

minimum: 

(a) The producer’s commitment to plant 

and grow peanuts, and to deliver the peanut 

production to the sheller or handler; 

(b) The sheller’s or handler’s commitment 

to purchase all the production stated in the 

sheller contract (an option to purchase is not 

a commitment); and 

(c) A base contract price. 

If the agreement fails to contain any of 

these terms, it will not be considered a 

sheller contract. 

2. Unit Division 

In accordance with the Basic Provisions, 

basic and optional units are applicable, 

unless limited by the Special Provisions. 

3. Insurance Guarantees, Coverage Levels, 

and Prices for Determining Indemnities 

In addition to the requirements of section 

3 of the Basic Provisions: 

(a) The price election percentage you 

choose for peanuts which are not insured in 

accordance with a sheller contract (may also 

include peanuts in excess of the amount 

required to fulfill your sheller contract) and 

for peanuts insured in accordance with a 

sheller contract must have the same 

percentage relationship to the maximum 

price election offered by us for peanuts not 

insured in accordance with a sheller contract. 

For example, if you choose 100 percent of the 

maximum price election for peanuts not 

insured in accordance with a sheller contract, 

you must also choose 100 percent of the 

applicable price election for peanuts insured 

in accordance with a sheller contract. 

(b) You may not insure more pounds of 

peanuts than your production guarantee (per 

acre) multiplied by the number of acres that 

will be planted to peanuts. For the purposes 

of determining the guarantee, premiums, 

indemnities, replant payments, and 

prevented planting payments: 

(1) Where all production of peanuts is 

grown under one or more sheller contracts, 

you may elect a price election to cover all 

insurable peanuts that is the base contract 

price contained in such sheller contracts or 

the price contained in the Special Provisions. 

(2) Where some peanuts are grown under 

one or more sheller contracts but some 

peanuts are not grown under a sheller 

contract, you may elect: 

(i) The price election contained in the 

Special Provisions to cover all insurable 

peanuts; or 

(ii) The price election using the base 

contract price for peanuts grown under a 

sheller contract and the price contained in 

the Special Provisions for peanuts not grown 

under a sheller contract. 

(3) Where none of the peanuts are grown 

under a sheller contract, the price election 

will be the price contained in the Special 

Provisions. 

(c) Any peanuts excluded from the sheller 

contract at any time during the crop year will 

be insured at the price election specified in 

the Special Provisions. 

4. Contract Changes 

In accordance with section 4 of the Basic 

Provisions, the contract change date is 

November 30 preceding the cancellation 

date. 

5. Cancellation and Termination Dates 

In accordance with section 2 of the Basic 

Provisions, the cancellation and termination 

dates are: 

State and county Dates 

Jackson, Victoria, Golliad, Bee, Live Oak, McMullen, La Salle, and Dimmit Counties, Texas and all Texas Counties lying 

south, thereof.

January 15. 

El Paso, Hudspeth, Culberson, Reeves, Loving, Winkler, Ector, Upton, Reagan, Sterling, Coke, Tom Green, Concho, 

McCulloch, San Saba, Mills, Hamilton, Bosque, Johnson, Tarrant, Wise, Cooke Counties, Texas, and all Texas counties 

south and east thereof; and all other states, except New Mexico, Oklahoma, and Virginia.

February 28. 

New Mexico; Oklahoma; Virginia; and all other Texas counties ..................................................................................................... March 15. 

6. Report of Acreage 

In addition to the requirements of section 

6 of the Basic Provisions, you must provide 

a copy of all sheller contracts to us on or 

before the acreage reporting date if you wish 

to insure your peanuts in accordance with 

your sheller contract. 

7. [Reserved] 

8. Insured Crop 

(a) In accordance with section 8 of the 

Basic Provisions, the crop insured will be all 

the peanuts in the county for which a 

premium rate is provided by the actuarial 

documents: 

(1) In which you have a share; 

(2) That are planted for the purpose of 

marketing as farmers’ stock peanuts; 

(3) That are a type of peanut designated in 

the Special Provisions as being insurable; 

(4) That are not (unless allowed by the 

Special Provisions or by written agreement): 

(i) Planted for the purpose of harvesting as 

green peanuts; 

(ii) Interplanted with another crop; or 

(iii) Planted into an established grass or 

legume; and 

(5) Whether or not the peanuts are grown 

in accordance with a sheller contract (if not 

grown in accordance with the sheller 

contract, the peanuts will be valued at the 

price election issued by FCIC for the 

purposes of determining the production 

guarantee, premium, and indemnity). 

(b) You will be considered to have a share 

in the insured crop if, under the sheller 

contract, you retain control of the acreage on 

which the peanuts are grown, you are at risk 

of a production loss, and the sheller contract 

provides for delivery of the peanuts to the 

sheller or handler and for a stipulated base 

contract price. 

(c) A peanut producer who is also a sheller 

or handler may establish an insurable interest 

if the following requirements are met: 

(1) The producer must comply with these 

Crop Provisions; 

(2) Prior to the sales closing date, the Board 

of Directors or officers of the sheller or 

handler must execute and adopt a resolution 

that contains the same terms as a sheller 


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contract. Such resolution will be considered 

a sheller contract under this policy; and 

(3) Our inspection reveals that the 

processing facilities comply with the 

definition of a sheller contained in these 

Crop Provisions. 

9. Insurable Acreage 

In addition to the provisions of section 9 

of the Basic Provisions: 

(a) Any acreage of the insured crop 

damaged before the final planting date, to the 

extent that the majority of producers in the 

area would normally not further care for the 

crop, must be replanted unless we agree that 

replanting is not practical. 

(b) We will not insure any acreage: 

(1) On which peanuts are grown using notill or minimum tillage farming methods 

unless allowed by the Special Provisions or 

written agreement; or 

(2) Which does not meet the rotation 

requirements, if any, contained in the Special 

Provisions. 

10. Insurance Period 

In accordance with the provisions of 

section 11 of the Basic Provisions, the 

calendar date for the end of the insurance 

period is the date immediately following 

planting as follows: 

(a) November 30 in all states except New 

Mexico, Oklahoma, and Texas; and 

(b) December 31 in New Mexico, 

Oklahoma, and Texas. 

11. Causes of Loss 

In accordance with the provisions of 

section 12 of the Basic Provisions, insurance 

is provided only against the following causes 

of loss that occur during the insurance 

period: 

(a) Adverse weather conditions; 

(b) Fire; 

(c) Insects, but not damage due to 

insufficient or improper application of pest 

control measures; 

(d) Plant disease, but not damage due to 

insufficient or improper application of 

disease control measures; 

(e) Wildlife; 

(f) Earthquake; 

(g) Volcanic eruption; or 

(h) Failure of the irrigation water supply, 

if due to a cause of loss contained in section 

11(a) through (g) that occurs during the 

insurance period. 

12. Replanting Payments 

(a) A replanting payment is allowed as 

follows: 

(1) In lieu of provisions in section 13 of the 

Basic Provisions that limit the amount of a 

replant payment to the actual cost of 

replanting, the amount of any replanting 

payment will be determined in accordance 

with these Crop Provisions; 

(2) Except as specified in section 12(a)(1), 

you must comply with all requirements 

regarding replanting payments contained in 

section 13 of the Basic Provisions; and 

(3) The insured crop must be damaged by 

an insurable cause of loss to the extent that 

the remaining stand will not produce at least 

90 percent of the production guarantee for 

the acreage and it is practical to replant. 

(b) The maximum amount of the replanting 

payment per acre will be the lesser of: 

(1) 20.0 percent of the production 

guarantee, multiplied by your price election, 

multiplied by your share; or 

(2) $80.00 multiplied by your insured 

share. 

(c) If there are different base contract prices 

or you also have insurable peanuts not grown 

under a contract: 

(1) If the sheller contracts are for different 

types of peanuts or one type of peanut is 

grown under a sheller contract and another 

is not, replanting payments will be valued 

using the price election elected by you for the 

planted acreage, as applicable (For an 

example, you have two sheller contracts and 

the base contract price is $0.23 per pound for 

Runner type peanuts, then $0.23 per pound 

will be used for the value of any replanted 

Runner type peanut acreage. If the base 

contract price is $0.21 per pound for Spanish 

type peanuts, then $0.21 per pound will be 

used for the value of any replanted Spanish 

type peanut acreage. 

(2) If the sheller contracts are for the same 

type of peanuts but they have different base 

contract prices: 

(i) If the peanuts under each sheller 

contract are insured in separate optional 

units, each respective price election from 

each sheller contract will apply to each 

respective unit; or 

(ii) If all or some of peanuts under both 

sheller contracts are insured in the same unit, 

then the replanted acreage will be prorated 

to each contract based on the number of acres 

needed to fulfill each contract (For example, 

if there are 20 acres in the unit and 10 were 

replanted, the production guarantee per acre 

for the unit is 2,000 pounds per acre, and the 

contract for $0.23 was for 25,000 pounds and 

the contract for $0.21 was for 15,000 pounds, 

then the acreage under the $0.23 contract 

constitutes 62.5 percent of the acreage in the 

unit (25,000/40,000) and the other sheller 

contract 37.5 percent of the acreage (15,000/ 

40,000). Of the 10 acres replanted, 6.25 acres 

(10 × .625) would be paid at the $0.23 price 

election and 3.75 acres (10 × .375) would be 

paid at the $0.21 price election). 

(3) If the peanuts are not grown under a 

contract, the replanting payments will be 

valued using the price election as specified 

in the Special Provisions. If the unit has 

peanuts grown under a sheller contract and 

peanuts not grown under a sheller contract, 

the replanted acreage must be prorated 

between the contract and non-contract 

acreage by determining the acreage grown 

under a contract and the remaining acreage 

in the unit (For example, if there are 20 acres 

in the unit and 10 were replanted, the 

production guarantee per acre for the unit is 

2,000 pounds per acre, there is a sheller 

contract for $0.23 for 25,000 pounds, the 

remaining peanuts are not grown under a 

sheller contract, and the price election in the 

Special Provisions is for $0.20. The peanuts 

under the sheller contract constitute 62.5 

percent (25,000/40,000) of the acreage in the 

unit and remaining peanuts constitute 37.5 

percent (40,000¥25,000/40,000) of the 

acreage. Of the 10 acres replanted, 6.25 acres 

(10 × .625) would be paid with the liability 

based on the $0.23 price election and 3.75 

acres (10 × .375) would be paid with the 

liability based on the $0.20 price election). 

(d) When the crop is replanted using a 

practice that is uninsurable for an original 

planting, the liability on the unit will be 

reduced by the amount of the replanting 

payment. The premium amount will not be 

reduced. 

(e) Replanting payments will be calculated 

using your price election and production 

guarantee for the crop type that is replanted 

and insured. A revised acreage report will be 

required to reflect the replanted type, if 

applicable. 

13. Duties in the Event of Damage or Loss 

Representative samples are required in 

accordance with section 14 of the Basic 

Provisions. 

14. Settlement of Claim 

(a) We will determine your loss on a unit 

basis. In the event you are unable to provide 

records of production that are acceptable to 

us for any: 

(1) Optional unit, we will combine all 

optional units for which acceptable records 

of production were not provided; or 

(2) Basic unit, we will allocate any 

commingled production to such units in 

proportion to our liability for the harvested 

acreage for the unit. 

(b) In the event of loss or damage covered 

by this policy, we will settle your claim by: 

(1) Multiplying the number of insured 

acres by the respective production guarantee 

(per acre) for peanuts insured under a sheller 

contract or not insured under a sheller 

contract, as applicable; 

(2) Multiplying each result of section 

14(b)(1) by the applicable price election for 

peanuts insured at the base contract price or 

the price election specified in the Special 

Provisions, as applicable; 

(3) Totaling the results of section 14(b)(2); 

(4) Multiplying the production to count by 

the respective price election (If you have one 

or more sheller contracts, we will value your 

production to count by using your highest 

price election first and will continue in 

decreasing order to your lowest price election 

based on the amount of peanuts insured at 

each price election); 

(5) Totaling the results of section 14(b)(4); 

(6) Subtracting the result of section 14(b)(5) 

from the result of section 14(b)(3); and 

(7) Multiplying the result in section 

14(b)(6) by your share. 

Example #1 (without a sheller contract): 

You have 100 percent share in 25 acres of 

Valencia peanuts in the unit, with a 

production guarantee (per acre) of 2,000 

pounds, the price election specified in the 

Special Provisions is $0.17 per pound, and 

your production to count is 43,000 pounds. 

(1) 25 acres × 2,000 pounds = 50,000 

pound guarantee; 

(2) 50,000 pound guarantee × $0.17 price 

election specified in the Special Provisions = 

$8,500.00 guarantee; 

(3) 43,000 pounds of production to count 

× $0.17 price election specified in the Special 

Provisions = $7,310.00; 

(4) $8,500.00 guarantee¥$7,310.00 = 

$1,190.00; and 

(5) $1,190.00 × 1.000 = $1,190.00; 

Indemnity = $1,190.00. 

Example #2 (with a sheller contract): 

You have 100 percent share in 25 acres of 

Valencia peanuts in the unit, with a 


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56000 Federal Register / Vol. 71, No. 186 / Tuesday, September 26, 2006 / Rules and Regulations 

production guarantee (per acre) of 2,000 

pounds. You have two sheller contracts, the 

first is for 25,000 pounds, price election 

(contract) is $0.23 per pound, and the second 

is for 10,000 pounds, price election (contract) 

is $0.21 per pound. The price election (noncontract) specified in the Special Provisions 

is $0.17 per pound, and your production to 

count is 43,000 pounds. 

(1) 25 acres × 2,000 pounds = 50,000 

pound guarantee; 

(2) 25,000 pounds contracted × $0.23 price 

election (contract) = $5,750.00; 

10,000 pounds contracted × $0.21 price 

election (contract) = $2,100.00; 

50,000 pound guarantee¥25,000 pounds 

contracted¥10,000 pounds contracted = 

15,000 pounds not contracted; 

15,000 pounds not contracted × $0.17 price 

election (non-contract) specified in the 

Special Provisions = $2,550.00; 

(3) $5,750.00 + $2,100.00 + $2,550.00 = 

$10,400.00 guarantee; 

(4) 43,000 pounds of production to count: 

25,000 pounds contracted × $0.23 price 

election (contract) = $5,750.00; 

10,000 pounds contracted × $0.21 price 

election (contract) = $2,100.00; 

43,000 pounds of production to 

count¥25,000 pounds contracted (at $0.23 

per pound)¥10,000 pounds contracted (at 

$0.21 per pound) = 8,000 pounds; 

8,000 pounds × $0.17 price election (noncontract) specified in the Special Provisions 

= $1,360.00; 

(5) $5,750.00 + $2,100.00 + $1,360.00 = 

$9,210.00; 

(6) $10,400.00 guarantee¥$9,210.00 = 

$1,190.00; and 

(7) $1,190.00 × 1.000 = $1,190.00; 

Indemnity = $1,190.00. 

(c) The total production to count (in 

pounds) from all insurable acreage on the 

unit will include all appraised and harvested 

production. 

(d) All appraised production will include: 

(1) Not less than the production guarantee 

for acreage: 

(i) That is abandoned; 

(ii) Put to another use without our consent; 

(iii) Damaged solely by uninsured causes; 

or 

(iv) For which you fail to provide 

production records that are acceptable to us. 

(2) Production lost due to uninsured 

causes; 

(3) Unharvested production (mature 

unharvested production may be adjusted for 

quality deficiencies and excess moisture in 

accordance with section 14(e)); 

(4) Potential production on insured acreage 

that you intend to put to another use or 

abandon, if you and we agree on the 

appraised amount of production. Upon such 

agreement, the insurance period for the 

acreage will end when you put the acreage 

to another use or abandon the crop. If 

agreement on the appraised amount of 

production is not reached: 

(i) If you do not elect to continue to care 

for the crop, we may give you consent to put 

the acreage to another use if you agree to 

leave intact, and provide sufficient care for, 

representative samples of the crop in 

locations acceptable to us (The amount of 

production to count for such acreage will be 

based on the harvested production or 

appraisals from the samples at the time 

harvest should have occurred. If you do not 

leave the required samples intact, or fail to 

provide sufficient care for the samples, our 

appraisal made prior to giving you consent to 

put the acreage to another use will be used 

to determine the amount of production to 

count); or 

(ii) If you elect to continue to care for the 

crop, the amount of production to count for 

the acreage will be the harvested production, 

or our reappraisal if additional damage 

occurs and the crop is not harvested; and 

(5) All harvested production from the 

insurable acreage. 

(e) Mature peanuts may be adjusted for 

quality when production has been damaged 

by an insured cause of loss. 

(1) To enable us to determine the number 

of pounds, price per pound, and the quality 

of production for any peanuts that qualify for 

quality adjustment, we must be given the 

opportunity to have such peanuts inspected 

and graded before you dispose of them. 

(2) If you dispose of any production 

without giving us the opportunity to have the 

peanuts inspected and graded, the gross 

weight of such production will be used in 

determining total production to count unless 

you submit a marketing record satisfactory to 

us which clearly shows the number of 

pounds, price per pound, and quality of such 

peanuts. 

(3) Such production to count will be 

reduced if the price per pound received for 

damaged peanuts is less than 85 percent of 

the price election by: 

(i) Dividing the price per pound for the 

damaged peanuts, as determined by us in 

accordance with section 14(e)(1), received for 

the insured type of peanuts by the applicable 

price election; and 

(ii) Multiplying this result by the number 

of pounds of such production. 

15. Prevented Planting 

(a) Your prevented planting coverage will 

be 50 percent of your production guarantee 

for timely planted acreage. If you have 

additional levels of coverage, as specified in 

7 CFR part 400, subpart T, and pay an 

additional premium, you may increase your 

prevented planting coverage to a level 

specified in the actuarial documents. 

(b) In addition to the provisions of section 

17(i) of the Basic Provisions, if there are 

different base contract prices or you also 

have insurable peanuts not grown under a 

contract: 

(1) If the sheller contracts are for different 

types of peanuts or one type of peanut is 

grown under a sheller contract and another 

is not, the liability will be determined using 

the price election elected by you for planted 

acreage, as applicable (For an example, you 

have two sheller contracts and the base 

contract price is $0.23 per pound for Runner 

type peanuts, then $0.23 per pound will be 

used for the value of any prevented planting 

Runner type peanut acreage. If the base 

contract price is $0.21 per pound for Spanish 

type peanuts, then $0.21 per pound will be 

used for the value of any prevented planting 

Spanish type peanut acreage. 

(2) If the sheller contracts are for the same 

type of peanuts but they have different base 

contract prices: 

(i) If the peanuts grown under each sheller 

contract are insured in separate optional 

units, the liability will be determined using 

each respective price election for the 

prevented planting acreage in each respective 

unit; or 

(ii) If all or some of the peanuts grown 

under the sheller contracts are insured in the 

same unit, then the liability for each contract 

must be determined separately using the 

respective price election and the number of 

eligible prevented planting acres to which 

the liability applies and will be determined 

by prorating prevented planting acreage to 

each contract based on the number of acres 

needed to fulfill each contract (For example, 

if there are 20 acres in the unit and 10 were 

prevented from planting, the production 

guarantee per acre for the unit is 2,000 

pounds per acre, and the contract for $0.23 

was for 25,000 pounds and the contract for 

$0.21 was for 15,000 pounds, then the 

acreage under the $0.23 contract constitutes 

62.5 percent (25,000/40,000) of the acreage in 

the unit and the other contract 37.5 percent 

(15,000/40,000) of the acreage. Of the 10 

acres prevented from planting, 6.25 acres (10 

× .625) would be paid with the liability based 

on the $0.23 price election and 3.75 acres (10 

× .375) would be paid with the liability based 

on the $0.21 price election). 

(3) If the peanuts are not grown under a 

contract, the liability for such peanuts will be 

based on the price election as specified in the 

Special Provisions. If the unit has peanuts 

grown under a sheller contract and peanuts 

not grown under a sheller contract, the 

eligible prevented planting acreage must be 

determined by determining the acreage 

grown under a contract and the remaining 

acreage in the unit (For example, if there are 

20 acres in the unit and 10 were prevented 

from planting, the production guarantee per 

acre for the unit is 2,000 pounds per acre, 

there is a sheller contract for $0.23 for 25,000 

pounds, the remaining peanuts are not grown 

under a sheller contract, and the price 

election in the Special Provisions is for 

$0.20. The peanuts under the sheller contract 

constitute 62.5 percent (25,000/40,000) of the 

acreage in the unit and remaining peanuts 

constitute 37.5 percent (40,000¥25,000/ 

40,000) of the acreage. Of the 10 acres 

prevented from planting, 6.25 acres (10 × 

.625) would be paid with the liability based 

on the $0.23 price election and 3.75 acres (10 

× .375) would be paid with the liability based 

on the $0.20 price election). 

Signed in Washington, DC, on September 

18, 2006. 

Eldon Gould, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. 06–8146 Filed 9–25–06; 8:45 am] 

BILLING CODE 3410–08–P 


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